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May 22, 2018

Around the State

| 10/1/1999
Miami's Vice
Political infighting stalls the city of Miami's
return from the fiscal brink.

Life in the city of Miami is beginning to resemble the telenovelas, the hugely popular Spanish-language soap operas filmed in Miami-Dade County and beamed to Hispanic viewers throughout the hemisphere. Among recent episodes: A city-wide election is overturned (and the mayor removed from office) amidst a massive voter-fraud scandal; an auditor uncovers a staggering $68-million budget shortfall that threatens to bankrupt the city; two commissioners and the city manager are indicted, convicted and thrown in jail on public corruption charges; and outraged residents lead an unsuccessful initiative to "abolish" Miami as a city.

So what's next for south Florida's signature city of 360,000 people? In the latest installment, Mayor Joe Carollo and the city commission have locked horns in an ego-driven power grab at City Hall. At stake is Miami's fragile, but improving, financial condition and a worldwide image already bruised and battered by incessant tales of crime, corruption and ineptitude.

On Nov. 2, Miami voters will decide whether to switch to a "strong-mayor" system of government. The proposed charter amendment would give the mayor responsibility for day-to-day operations and many other duties of the city manager, whose post will be eliminated. Proponents say the change will assure greater accountability within a city where potholes go unfilled and public corruption often goes unnoticed. "A strong-mayor system will give the people of Miami someone who is ultimately responsible," says City Commissioner Tomas Regalado, "when things go right and when they go wrong."

Critics of the plan say the proposal, which would also strengthen the city commission and has the backing of all five commissioners, will politicize many functions of city government by placing city jobs and contracts in the hands of those least to be trusted -- elected officials.

Among the fiercest of critics: Mayor Carollo, who notes that under the proposal the commission will set the pay scales of city employees, approve hiring and firing of department heads, and determine how to spend money allocated to the mayor's office. The Miami Herald, in a stinging editorial, called the proposal a "scam" engineered by a power-hungry commission.
Vision or vendetta?

If the amendment passes, Carollo will have to stand for reelection in March -- 20 months earlier than his current term mandates. Short-fused, insolent and chronically short of political allies, Carollo sees the measure as an attempt to force him from office. Indeed, the commission's hand-picked chairman of the charter review panel, which brought forth the strong-mayor proposal, was former Commissioner Victor De Yurre, an unabashed Carollo-foe and eager challenger for the mayor's seat. A host of other willing candidates -- including former Mayor Xavier Suarez, whose November 1997 election was overturned following voter-fraud violations -- also are lining up.

"This is plainly the result of a vendetta designed to drive the mayor from office early," says Tucker Gibbs, a Miami attorney who served, at Carollo's request, on the charter review panel. "Joe may not have a lot of finesse but he's honest, and as long as he's around and the city manager is in place, the commissioners know Miami is not their private little sandbox where they and their friends can come and play."

Such lively theater has a rapt audience on Wall Street, where $165 million in city bonds continue to be rated below investment grade. A rating increase of one grade could save the city at least $1 million a year. In July, Moody's declined to upgrade the city's bonds from the current BA1, citing the political turmoil ignited by the amendment proposal. "The political infighting that has resulted from the proposed change, together with the instability that is likely to result should this change be approved, are likely to be detrimental to the recovery process," Moody's wrote. The city's BB rating with Standard & Poor's also remains unchanged, despite an anticipated $5-million budget surplus. Meanwhile, Miami's state-appointed Financial Oversight Board, charged with monitoring the finances of the nation's fourth poorest city, is showing no intention of closing up shop. Says Gibbs: "It's just one more horrible embarrassment for the city of Miami."

In the News
Boca Raton -- With the recently announced addition of Nordstrom, Tiffany & Co. and William Sonoma and significant expansions to its existing Saks Fifth Avenue and Bloomingdale's stores, the Town Center at Boca Raton will increase in size to 1.5-million square feet. The expansion should be complete by late 2000.

Broward County -- Florida Marlins owner John Henry has identified six sites as potential locations for a new stadium. Two are in downtown Miami -- along the Miami River and within Bicentennial Park -- while the others are in the Broward cities of Miramar, Davie, Lauderhill and Fort Lauderdale. Henry is seeking state and local funding to offset much of the estimated $400-million construction cost.

Symbolizing its need to expand readership beyond Miami-Dade, The Miami Herald announced plans to build a new 46,000-sq.-ft. Broward headquarters. Located on Sheridan Street near I-75 in Pembroke Pines, the building will consolidate much of the paper's Broward County operations. The Knight Ridder-owned Herald is locked in a fierce battle with the Tribune Company's Fort Lauderdale Sun Sentinel.

Fort Lauderdale -- To stimulate its sluggish stock price, AutoNation (NYSE-AN) will divest itself of its auto rental unit, comprised of Alamo, National Car Rental and CarTemps USA. Despite strong gains in revenue growth and earnings at AutoNation's much larger auto-retailing division, Wall Street has shown little interest in the company.

Miami-Dade County -- In the latest in a string of discrimination lawsuits around the country against Denny's restaurant chain, a federal judge has ruled that a west Miami-Dade manager unfairly denied service to a group of state corrections officers last January. Six of the officers were black and three were white. After settling a class-action lawsuit in 1994 for $46 million, the South Carolina company has been operating under a court-appointed monitor to oversee diversity training.

Despite a population that is nearly 60% of Latin origin, Miami failed to place among the nation's top 10 most livable cities in the U.S. for Hispanics. The ranking, compiled by Hispanic Magazine, a nationwide monthly based in Coral Gables, is based on such factors as crime, traffic, healthcare, recreation and job growth. Tampa, the only Florida city on the list, was joined by San Antonio, Albuquerque, N.M., Denver, San Jose and Anaheim, Calif., Las Vegas, Phoenix, Philadelphia and Grand Rapids, Mich.

Caterpillar, the construction equipment giant, will move its Latin American office to Miami from its corporate headquarters in Peoria, Ill. The move is expected to create 100 jobs within the next two to three years. Caterpillar, which did nearly $2-billion worth of business in Latin America last year, will locate in the Wafford Blue Lagoon office park, adjacent to Miami International Airport.

Palm Beach County -- The Federal Bureau of Labor Statistics announced that Palm Beach County led the nation in the rate of job growth last year, generating 32,000 new positions from March 1998 to March 1999. The county also led in the growth of real estate deals, with a 13.4% increase from a year earlier. Palm Beach County has the highest per capita income in the nation -- $35,358.

Sebastian -- Capt. Hiram's, a locally owned restaurant and marina, is building a $3-million, 52-room motel that will be run by Key West Inns Inc. of Birmingham, Ala., and create up to 40 jobs when it opens in February. Hiram's is the largest employer in the area, with about 100 workers.

Boca Raton fragrance distributor Model Imperial crashed into bankruptcy three years ago, but the company's still causing big problems for its former south Florida auditors at KPMG Peat Marwick. A nasty lawsuit that claims KPMG failed to discover massive accounting fraud at Model Imperial goes to trial this month -- so far there are 97 witnesses and 5,378 trial exhibits scheduled. KPMG denies any blame, but it doesn't help that Model's former CFO Steven Kesh used to work at KPMG, where he supervised the Model audit. That relationship made KPMG something less than an "independent" auditor, the lawsuit claims. Three lenders who lost big in the Model bankruptcy want KPMG to cough up $34 million. ... ... Big corporate bankruptcies have dwindled here in recent years, meaning south Florida bankruptcy lawyers have had to find other things to do. But they smell a new wave of corporate wipeouts coming. "It's like a hurricane," says bankruptcy trustee Ken Welt. "You know it's going to come, you just don't know where it's going to hit and how big it'll be."

Tags: Florida Small Business, Politics & Law, Southeast, Business Florida

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